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Treasurer expects an upward trend in employment and low inflationary growth in the economy despite some market concern that the December quarter figures will reveal negative growth

ELLEN FANNING: Will it be growth quarter number 18 or not? It's still more than three months before the December quarter economic growth figures are released, but already the Government and the Opposition are arguing about what they'll be.

The Opposition Leader, John Howard, began the debate yesterday in Perth when he claimed that key government departments were leaking information to the markets warning of negative economic growth for the first time in 17 quarters, or more than four years. But the Treasurer, Ralph Willis, denies the Government is bracing itself for bad news on 20 March. Ralph Willis says, in fact, his economic advisers are predicting continued modest growth.

Mr Willis was in Sydney last night and began the evening with this salvo.

RALPH WILLIS: Well, I just say that's another Liberal lie. I mean, this is what you expect from someone who's got no policies and whose only tactic to win the next election is scaremongering. Just remember this is the guy who, at the last election, was predicting a depression, since which time we've had record economic growth and over 600,000 additional jobs. So what do you expect from him?

JULIE POSETTI: So, you deny a leak then?

RALPH WILLIS: Absolutely deny that there's any suggestion by my department or any other department that has anything to do with economic policy that there's going to be a negative quarter next quarter.

JULIE POSETTI: In fact, he presented an up-beat assessment of the Australian economy and confidently predicted the continuation of what he described as an already unprecedented period of continuous economic growth.

RALPH WILLIS: The biggest impediment to continue growth of the economy would be for us to change government.

JULIE POSETTI: But according to one senior economist present last night, about 20 per cent of forecasters are predicting a negative December quarter result. And while the Treasurer declined the challenge from the audience to appear naked in public if the December figure is below zero, he acknowledged the likelihood of a less positive result than previous quarters.

RALPH WILLIS: Well, we're not expecting to have four quarters of growth at 1.6 per cent, which is what we had in the September quarter, but we are expecting to see the economy continue to grow, and it's not just our view, that's the view of private sector forecasters. And if you look at the Economist magazine, which publishes the assessments of private sector forecasters in 15 OECD countries, they say that in 1996 they expect Australia to be the fastest growing country of those 15 OECD countries. So, it's a general expectation of forecasters that Australia will continue to grow at quite substantial rates, over 3 per cent, next year.

JULIE POSETTI: Mr Howard commented that he thought that this information might indicate room for a drop in interest rates, which is a change in his policy. Do you think that he's just trying to steal the debate or scaremongering?

RALPH WILLIS: Well, obviously this is a total scaremongering tactic by him with no basis whatever. I don't have anything to say about interest rates, expect to say that we haven't increased them since December last year. So, we've virtually gone a year without an increase in interest rates and certainly the slowing of the economy, which we've achieved, has been brought about in part by the interest rate measures; that's, I think, made the recovery more sustainable. It means we haven't got boom and bust. It means we can go on with a low inflationary growth and that's the kind of growth that you can pursue on and on and on.

JULIE POSETTI: With tongue in cheek, Mr Willis told the gathering if he was still Treasurer after the next Federal election, he would view his survival as his greatest achievement in office, but he went on to express pride in his work.

RALPH WILLIS: In terms of me being the Minister responsible for the economy, that's something that I feel very pleased about. And if we want to have an election based on the economy, as Mr Howard keeps saying, we are more than delighted to have it on that basis, because by any basis of comparison that you want to make in terms of how we're comparing with other countries, how we've compared with the past, particularly in the period when John Howard was Treasurer, we look fantastic.

JULIE POSETTI: The latest job figures are out this week, and while Mr Willis admits it's a challenging task, he's sticking by his government's commitment to get the unemployment rate down to 5 per cent by the turn of the century.

RALPH WILLIS: Well, my expectation is that we will get back onto a jobs growth path in the course of this financial year, and probably fairly soon. We had very fast growth of employment in the first six months of this year - 200,000 additional jobs in the first six months whilst the economy was slowing. Now, I think there's been a bit of a correction to that since, because the growth of employment was well ahead of the growth of the underlying economy. So, I think we've had a bit of a pause. Obviously it's very difficult to forecast any particular month what's going to happen. Even when you've got the employment growing very, very strongly, you get months where numbers go down. But I expect that we'll see over the next few months a clear upward turn in employment.

ELLEN FANNING: The Federal Treasurer, Ralph Willis, in Sydney last night after addressing a dinner for the group, Australian Business Economists.